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Planning Procurements in Project Management

Planning Procurements in Project Management
By Jeremy Siegel

The process of planning procurements involves determining the project’s need for materials or services found outside of the organization and documenting those procurements determined to be required. The scope baseline, requirements documentation, and risk register are key inputs for the process. Different tools used include make-or-buy analysis, contract types, and expert judgment. Make-or-buy analysis weighs the pros and cons of making a deliverable internally or buying it externally. Factors such as cost, risk, time, and legal implications should be considered.

The type of contract that governs the procured work should also be decided upon in the planning for procurements phase. Different contracts are appropriate for different situations. For example, if a project’s scope is clearly defined, the buyer might prefer to pay the vendor a fixed price for the work performed because the requirements are known and the cost to the buyer will not increase. Read the Complete Article

Project Management – Close Procurements

Project Management – Close Procurements
By Simona Belindean, Northwest University

All things – good or bad – must come to an end. And as we now understand, even the project must come to an end, and deliver according to scope by a specific date and within an approved budget. But in the process of finalizing the project, contracts must also be completed, and as such, deliverables must be verified and accepted according to contractual stipulations. This final phase, known as “Close Procurements,” confirms for both buyer and seller that the contract was executed, and final, legal closure can take place.

In the process of closing out procurements, inputs that a project manager has for verification of completion and delivery to project scope is the project management plan, and any procurement documentation that provides a description of the work performed.

During the course of a contract, the project manager must also verify that the contracted work is being completed to agreed upon specifications. Read the Complete Article

Sub-Contractors – Part of the Project Management Team?

Sub-Contractors – Part of the Project Management Team?
By James Clements

During the development of Bids & Proposals and in the Planning phases of any Project you will undoubtedly be faced with decisions on the scope of work that will be undertaken in-house by your project management team and wider organization, and then, what scope of work will be outsourced to third party vendors and suppliers.

In its purest form, you will need to undertake make or buy decisions and this is a key project integration management process, particularly as you develop the roles, responsibilities and interfaces between your team, organization and the suppliers.

Conventional wisdom, whatever that is, tells us that everyone that interacts with and/or provides goods and services to a project, is part of the project management team in the broadest sense of the definition, but reality tells us there are varying levels of Project Team, like the layers of an onion. Read the Complete Article

Seven Contract Management Tips You Need to Know

Seven Contract Management Tips You Need to Know
By Michael L Young

To successfully manage contracts for a government agency requires that you are able to:

  • Develop suitable arrangements for managing the contract, including establishing risk management and communication strategies
  • Monitor the contractor’s performance against the contract and deal with issues such as contract variations and disputes

  • Complete the contract, review the contractor’s performance and prepare a contract review or audit report that can be used in future evaluations.

This is all text book stuff but I have developed seven tips you need to know to facilitate this process and become a successful contract manager:

  1. Relationships are everything

    Maintaining good relationships with suppliers is vital to the successful completion of any project. You need to try to work as partners with suppliers to get the job done for the benefit of the project. Once a contract gets into dispute, no-one ends up winning and the project almost always suffers as a result.

Read the Complete Article

Legal Aspects of Contract Management

Legal Aspects of Contract Management
By Michael L Young

While procurement and contract managers are not expected to be legal experts, it is very difficult to manage a contract well without a basic understanding of the key elements to a contract and the meaning of significant terms and clauses.

The Australian public service has been highly criticized from being “risk averse” what does this mean for a contract manager? There is a distinction between a good contract manager and a bad contract manager:

  • A bad contract manager is not very well qualified and applies or thinks that they are following the rules for the sake of the rules even if it means a less than desirable outcome in business terms.
  • A good contract manager is well-qualified and asks how can we interpret the law responsibly and reasonably to ensure the best possible business outcome.

Law and rules were created to serve society rather than society serves the law and rules. Read the Complete Article

Sales Process Meets Project Management

Sales Process Meets Project Management
By Mike Cunningham

The essential characteristic of most sales situations is that the supplier is keen to sell and is in competition situation with other vendors. Conversely, the customer has a choice of vendor and is seeking the best capability on the most favorable terms. All the time the sales team will be under pressure to offer the best price and delivery time. The vendor is keen to win the business and not do anything to put that at risk. Equally the customer is keen to secure the best deal. In this situation there may be negotiated changes in pricing, and undocumented promises and assumptions that introduce delivery risk and latent issues. For example:

  • During commercial negotiations project pricing may be reduced without clear and fully justified reductions in scope.
    • The timeline is invalidated due to changes in scope, budget or start date.
    • Risks are overlooked and not sufficiently reflected in contingency
  • Risks are not all understood by vendor management nor customer management.
Read the Complete Article

Hey! You Got Supply Chain in My Project Management!

Hey! You Got Supply Chain in My Project Management!
By John Westerveld

Recently I was reminded of an old TV commercial for Reese’s Peanut Butter Cups. Now, some of the readers of this blog may not be old enough to remember this commercial, so I’ll give you the “Cliffs Notes” version. One person is walking down the street enjoying their peanut butter (what…doesn’t everyone eat peanut butter from a jar while walking down the street?). Another person is walking the other way eating a chocolate bar. The inevitable happens; and they collide causing the chocolate bar to get into the peanut butter. One of them declares “Hey, you got your chocolate in my peanut butter!” the other replies “You got your peanut butter on my chocolate!” Then to everyone’s surprise, they find that the combination works!

So, what does this have to do with supply chain you ask? Many companies have major installation projects required to recognize revenue for their products; solar farms, cell phone towers, major equipment installation, etc. Read the Complete Article

Top 10 Procurement Risks – Tender Preparation

Top 10 Procurement Risks – Tender Preparation
By Michael L Young

Responding to RFTs (requests for tenders) can be risky, given that your tender response is a legal offer and you may be bound to the terms within it, if the client accepts it. Responding to a complex tender can also be very time-consuming, tying up substantial company resources for significant periods of time.

For both of these reasons you need to:

  • Evaluate the risks associated with each tender carefully, to ensure that it is in your organization’s best interests to respond
  • Establish an effective team to develop the bid and work to a realistic schedule that will allow the team to produce a thorough response within the available timeframes
  • Oversee the development of human and physical resource cost estimates very carefully, to ensure that the tendered price is accurate and comprehensive of all likely costs
  • Prepare the response carefully, to ensure that it meets all necessary requirements and evaluate it to ensure that it is accurate and professional
  • Gain the necessary endorsement or approval before submitting the tender response to the client.
Read the Complete Article

How Are Contracts Used in Projects?

How Are Contracts Used in Projects?
By Brian EganGlobal Knowledge

When you hire someone to do work or to deliver a product, you expect them to do it right, and they expect to be paid. When transactions are simple, such as the purchase of fuel at a gas station, there is no confusion about whether the services were delivered or the right amount paid.

However, complex purchases (procurements) are not so easy to assess. Contracts become necessary when there is uncertainty about who will do what (scope), by when (schedule), and for how much (cost). They are used to clarify expectations and to define mechanisms for problem resolution in the event of misunderstanding that leads to conflict.

Contracts are meant to solidify/clarify/explain commitments on both sides of an agreement. Contracts should state exactly what the seller will do or deliver, and when, as well as what consideration the buyer will provide (and when) in exchange for those goods and services. Read the Complete Article

How to Develop a Procurement Management Plan for Outsourced Projects

How to Develop a Procurement Management Plan for Outsourced Projects
By Michael D. Taylor

Since those who are assigned to a Procurement Management Team are often nonplused with their role, it is incumbent upon the project manager to facilitate the development of a comprehensive procurement management plan. The plan is to be directed to the PMT, not to the outsourced organizations, and its purpose is to ensure that the PMT understands how it will operate within the project environment, how it will establish subcontracts, and how it will manage and monitor the subcontractors. This plan should include the following aspects:

  • Procurement goals
  • Team roles (RAM)
  • Competitive vs. sole-source rationale
  • List of potential bidders
  • Subcontractor selection method
  • Procurement risk management plan
  • Subcontractor monitoring and control methods

Procurement goals. The specific goals of the eventual subcontract will define not only the objectives of the subcontract around the constraints of time, cost, and scope, but it should include their relative priorities. Read the Complete Article

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